Question

Selected Stock Transactions

The following selected accounts appear in the ledger of Parks Construction Inc. at the beginning of the current year:

Preferred 2% Stock, $150 par (80,000 shares authorized, 40,000 shares issued)	$6,000,000
Paid-In Capital in Excess of Par—Preferred Stock	720,000
Common Stock, $20 par (700,000 shares authorized, 320,000 shares issued)	6,400,000
Paid-In Capital in Excess of Par—Common Stock	830,000
Retained Earnings	29,574,000

During the year, the corporation completed a number of transactions affecting the stockholders' equity. They are summarized as follows:

1. Issued 70,000 shares of common stock at $25, receiving cash.
2. Issued 20,000 shares of preferred 2% stock at $169.
3. Purchased 42,000 shares of treasury common for $24 per share.
4. Sold 21,000 shares of treasury common for $27 per share.
5. Sold 14,000 shares of treasury common for $22 per share.
6. Declared cash dividends of $3.00 per share on preferred stock and $0.04 per share on common stock.
7. Paid the cash dividends.

Journalize the entries to record the transactions.

For a compound transaction, if an amount box does not require an entry, leave it blank.

Required:

a. Issued 70,000 shares of common stock at $25, receiving cash.

b. Issued 20,000 shares of preferred 2% stock at $169.

c. Purchased 42,000 shares of treasury common for $24 per share.

d. Sold 21,000 shares of treasury common for $27 per share.

e. Sold 14,000 shares of treasury common for $22 per share.

f. Declared cash dividends of $3.00 per share on preferred stock and $0.04 per share on common stock.

g. Paid the cash dividends.

Answer 1

Events	Particulars			Debit	Credit
a)	Cash			$ 1,750,000.00		($ 25 x 70000)
	To Common Stock				$ 1,400,000.00	($ 20 x 70000)
	To PIC in excess of par - Common				$    350,000.00	($ 5 x 70000)
b)	Cash			$ 3,380,000.00		($ 169 x 20000)
	To Preferred Stock				$ 3,000,000.00	($ 150 x 20000)
	To PIC in excess of par - Preferred				$    380,000.00	($ 19 x 20000)
c)	Treasury Stock			$ 1,008,000.00
	To Cash				$ 1,008,000.00
	($ 24 x 42000)
d)	Cash			$    567,000.00		($ 27 x 21000)
	To Treasury Stock				$    504,000.00	($ 24 x 21000)
	To PIC from sale of Treasury Stock				$      63,000.00	($ 3 x 21000)
e)	Cash			$    308,000.00		($ 22 x 14000)
	PIC from sale of Treasury Stock			$      28,000.00		($ 2 x 14000)
	To Treasury Stock				$    336,000.00	($ 24 x 14000)
f)	Cash Dividends			$    195,320.00		Workings
	To Cash Dividends Payable				$    195,320.00
g)	Cash Dividends Payable			$    195,320.00
	To Cash				$    195,320.00

	Workings
	Common Stock Outstanding
	Beginning balance			320000
Add:	Issued			70000
Less:	Treasury stock purchased			-42000
Add:	Treasury Stock sold			35000
	Common Stock Outstanding			383000
	Dividend per share			$                0.04
	Dividend declared			$      15,320.00
	Preferred Stock Outstanding
	Beginning balance			40000
Add:	Issued			20000
	Preferred Stock Outstanding			60000
	Dividend per share			$                3.00
	Dividend declared			$    180,000.00
	Total Dividend Declared			$    195,320.00